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It's commonly known that the better your credit reports and credit scores, the better interest rates and terms you're likely to get from lenders and other service providers. Solid credit reports and scores indicate a lower level of credit risk, which can cause lenders to feel more comfortable offering attractive terms. If you have poor credit, however, lenders are less likely to offer you their most advantageous deals.

Because of this financial reality, people with poor credit seeking ways to improve it may consider hiring a third-party credit repair company. While it may seem like a good idea to pay someone to fix your credit reports, there is nothing a credit repair company can do for you that you can't do yourself for free.

Credit repair companies cannot fix your credit. They don't have a secret backchannel to the three credit bureaus (Experian, TransUnion and Equifax) that allows them to get information removed. Further, the credit bureaus don't delete credit information simply because you've hired a credit repair company. There's simply nothing a credit repair company can do for you that's any more effective than what you can do on your own.<?

How Much Does Credit Repair Cost?

The Credit Repair Organizations Act (CROA) defines a credit repair organization as any for-profit company or person that provides a service, in exchange for payment, that purports to improve your credit reports or credit scores.

Credit repair companies generally charge a subscription fee for work performed during the prior month, or they may charge for each credit report deletion they achieve. The monthly subscription fee generally runs around $75, but it can vary depending on the company and the service you select. They may also charge based on how many items end up being removed from your credit reports. Fees for deleted items also vary, but can be $50 or higher per item, per credit bureau. In either scenario, it's easy to see how quickly fees could potentially add up to hundreds or thousands of dollars.

How to Fix Your Credit Without Paying

It's important to know that you have the power to repair your own credit, for free. One of the most important rights conveyed by the Fair Credit Reporting Act is the right to dispute any information on your credit reports you feel is incorrect and to have that information corrected or removed if it is found to be inaccurate. The dispute process is available to you at no cost.

To ensure your credit reports are accurate, review them periodically. You can view credit reports from each of the credit bureaus for free once every 12 months at AnnualCreditReport.com. There are also several states with laws providing for additional free credit reports, and other conditions whereby credit reports are available at no cost. You can also check your Experian credit report for free every 30 days once you create an account.

Save Your Money

Paying a credit repair company to "fix" your credit report is usually a waste of money since you can dispute credit report information yourself, for free. In either case, information will only be removed or modified if it is inaccurate.

If you believe you've found errors on one or more of your credit reports, federal and state laws provide you with options to have those errors investigated and corrected. You can dispute items on your Experian report, for example, by going to the Experian Dispute Center.

Credit repair costs can quickly run into the hundreds of dollars, and credit repair companies are not legally allowed to guarantee that they can have credit information removed. As such, the cost benefit of hiring a credit repair company simply isn't there. You'd be better off saving your money and filing free credit report disputes on your own behalf.

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